Chelsea mayor announces intention to purchase sewer system

Chelsea City Hall

Chelsea City Hall

The city of Chelsea is moving forward with plans to purchase the sewer system that exists within city limits.

The announcement was made at the June 19 Chelsea City Council meeting, and the mayor intends to bring a resolution before the council on July 10. Mayor Tony Picklesimer said the intention is “to purchase the part of the sewer system that is in the city limits or to purchase the entire system for up to $20 million.”

A new tax or tax increase would not be necessary to fund the system, Picklesimer said, and the system “will pay for itself based on current rates paid by both individuals and business owners.” The city also does not aim to make money on the system, but rather provide an affordable service to residents and developers.

The sewer system, called Shelby Ridge Utility Systems, was officially formed in April of 2018, after Double Oak Water Reclamation sold the system. A majority of the system, about 60 percent, is within Chelsea city limits, according to a press release from the city of Chelsea, with 30 percent in unincorporated Shelby County and 10 percent in the city of Pelham.

Chelsea previously discussed the purchase of the sewer system in March of this year, when the council approved an appraisal of the wastewater and sewer systems. The city also formed a Governmental Utilities Services Corporation, or GUSC, in September with the intentions of negotiating sewer rates.

Those negotiations stopped earlier this year, according to Picklesimer and representatives of SouthWest Water Company and Shelby Ridge. Picklesimer said the rates and length of contract proposed by SouthWest Water Company were unacceptable.

The negotiations included between a 3-7 percent increase each year for a minimum period of 99 years, Picklesimer said.

When speaking with 280 Living in April, SouthWest Water Managing Director Craig Sorenson said that the agreement included a few years without an increase and then a rate increase based on the Consumer Price Index. These increases would be on top of rates that Chelsea residents have voiced concerns over for about two years.

After negotiations stopped, the city sent Double Oak a letter requesting a five-year financial history as well as other information regarding the system, including the fair market value if that had been established, in order to conduct an appraisal. Picklesimer said that the response received to that letter was that the information would not be provided.

“They responded that, ‘We’re not for sale and we’re not releasing any financial information,’” he said.

Picklesimer said in addition to citizen dissatisfaction with the sewer rates, the rates have negatively impacted the city’s ability to attract new commercial business buildings. Few commercial business buildings have been constructed since the Applebee’s was built 2012. That building's initial sewer tap fee of at least $142,000, Picklesimer said, and “the only way the city was able to recruit the restaurant was because the city offered a large retail incentive to help offset the fees” in 2010.

At the meeting, Picklesimer said that no other commercial buildings had been constructed since the Applebee's was built. That statement, however, was corrected on Friday, June 22 to say there had been "very limited" commercial development.

“I believe the limited amount of new commercial development is largely because the sewer tap fees and rates are excessive,” Picklesimer said in the updated statement.

Bringing the future resolution to purchase the system before the council was important, Picklesimer said, to keep the residents of Chelsea informed.

He also said purchasing the system would be an investment in the city, just as the council voted to do in the 1990s when it paid $3 million to build a waterline system down U.S. 280 to the Chelsea Park subdivision.

“That [$3 million] number sounded like the $20 million number sounds now because this was 20 years ago. And there was some skepticism — ‘Does the city need to spend this much money on its infrastructure?’ — but looking back, had that not been done, there would be no Publix, there would be no Walmart, there would be no Chelsea Park.”

The growth happened because the city leaders decided to spend on that infrastructure, and Picklesimer said he believes the city council will be “just as courageous.”

The next step will be when the resolution comes before the council, and if approved, “There’s a legal process that has to be followed,” City Attorney Mark Boardman said.

Also at the meeting, the council:

Approved the minutes of the June 5 meeting.

Approved a bid from Shelby County to pave Chelsea Corners Way. The resolution authorized the payment of no more than $50,000.

Approved a resolution to designate COP vehicles as emergency vehicles.

Approved a resolution to declare two vehicles — a 1977 fire truck and a transport unit — as surplus and to donate those vehicles.

Voted to pay the city’s bills.

Editor's note: This article was updated on June 22, 2018 at 1:46 p.m. to reflect a corrected statement from Mayor Tony Picklesimer.